Senator MARK BISHOP (Western Australia) (16:05): I rise to make some comments on the Foreign Acquisitions Amendment (Agricultural Land) Bill 2010. Before turning to my more formal remarks, I just want to put on the record that twice over the past 24 hours I have taken the opportunity to read this report. It was drafted under the committee chairmanship of former Senator Hurley and the Senate Economics Legislation Committee secretariat. It is a most thorough report and it is well worth reading because it reduces to a small number of pages some of the difficult arguments that have been put around in this debate, notwithstanding the relatively small number of witnesses who chose to make a sub­mission and give evidence. It is a most thorough report and I commend it to those who are interested in this particular discussion.

One of the features of the independence of the Senate is, of course, that it provides an open forum for senators to publicly express concerns on any matter, which often would otherwise not be heard. It is a fact enabled by the lack of a government majority, and we in government and those in opposition must tolerate it. The downside of it is that many of those concerns essentially are minor and may have little merit. In fact, they may simply be a waste of time. Often we find that due to a lack of discipline and focus the Senate can become hostage to narrow and ill-informed acts of populism. So it is with this private members' bill, I must say at the outset.

It is very easy, especially for an Independent or an opposition party, to represent any narrow, sectoral view on the basis of no care and no responsibility. Yet, when the populist view is exposed to analysis, we see that it often fails the critical policy test. That is not to say that the interest represented by Senator Xenophon and Senator Milne, the sponsors of the bill, is not genuine or that the interest is not widely noted and widely supported. But the problem with populism is that it is rarely well informed of all the facts, the context or the broader considerations at a national level. So we are constantly bombarded with a load of ideas about what the government should do or should not do. That is the greatest asset, in one sense, of a democracy but also the major cause of conflict in political debate where so often fact and analysis is challenged.

We also know that the great majority of government legislation passes through this chamber unaltered. Few pieces of legislation stumble and, then, only for political reasons when opposition parties for their own interests judge that there is a significant advantage in pandering to a particular populist view, regardless of fact and analysis. The list of examples is endless, ranging from new railways—fast or slow—to turning the rivers westward or stopping Vegemite and Weet-Bix being sold to foreigners. We do understand that out there in the community there will always be some ill-founded fear of foreigners to be used in political manipulation, and governments fail this test simply because they regularly fail to sway that populist sentiment.

Opposition, however, are clearly not always that fickle, as evidenced by the bulk of legislation passed without objection. Their own long-held and researched policy position is often the same. This bill, however, is not in that class of policy, but Senator Xenophon will be able to return to his interest group and say he tried. I think his remarks foreshadowed further and different attempts. But having wasted our time he will claim his credit as well as a headline, which is the main game.

This bill seeks to seriously limit the amount of Australia's farmland which can be purchased by foreign investors. It seeks to completely change national policy and the rules which apply to all foreign investment, which have had longstanding, apolitical support. It proposes that any bid to buy interests in agricultural land of greater value than $5 million be subject to the application process of the Foreign Investment Review Board and the decision of the Treasurer. This is at least better than the original proposal to make the limit five hectares, as is the case, the report informs us, in New Zealand. Further, it requires that the Treasurer publish online the application of interest and update that information as the application proceeds. These arrangements are proposed to apply to both the acquisition of farm real estate and any interest in agricultural land, such as management rights, leases of more than five years and profit-sharing arrangements, which are common in the agricultural industry.

However, the bill, as I said in my introductory remarks, has been thoroughly examined by the Senate Economics Legislation Committee and totally rejected. The committee applied the following questions: whether the current screening arrangements were inappropriate, whether there was advantage in retaining the inherent flexibility associated with a national interest test that is not overly prescriptive, how this fits within the existing screening arrange­ments for other investments in Australia and how this would impact on Australia's international obligations under Australia's various free trade agreements. The Senate Economics Legislation Committee concluded that it was essential that Australia remain a country that welcomes foreign investment, that it should continue to be an attractive place to invest, that any changes to foreign investment policy or legislation should be considered in this light and that the proposed national interest test applying only to agricultural land would effectively create two separate national interest tests. The committee continues to hold the view that the current regulatory framework for assessing investment proposals is adequate or indeed, from reading the text, more than adequate.

The committee also identified the need to maintain consistency with Australia's FTA and OECD obligations, freely entered into and repeatedly endorsed by appropriate committees of this parliament—that is, the commitments Australia has made to screening thresholds for business acquisi­tions in its free trade agreements with Singapore, Thailand, the United States and Chile and, when in force, the recently signed investment protocol with New Zealand. The changes in the bill to screening thresholds would violate our commitments under these free trade agreements. If Australia were to adopt the proposals contained in the bill before the chair, our trading partners would be allowed to retaliate. This could be in highly sensitive areas for Australia, including in agricultural sectors such as beef and others where we engage in large volumes of and receive large dollars for exports. The FIRB—the Foreign Investment Review Board—already screens foreign governments or government related entities that attempt to acquire rural land. This bill will not change that.

Having said all of that, let me supply some of the detail concerning foreign investment which underpins the committee's conclusion because the statistics that are publicly available and some of the additional materials that were supplied by Treasury to questions on notice are remarkable. Foreign investment is essential to Australia's continued economic growth and prosperity, including in the agriculture sector. In terms of the current debate and the matters raised by Senator Xenophon and Senator Milne, I think it is worth having a good look at where that investment goes.

Broadly speaking, about 30 per cent of FDI, foreign direct investment, goes to mining, around 20 per cent goes into manufacturing, 10 per cent flows to the wholesale and retail sectors, and around 15 per cent goes to the finance and insurance sectors. In 2010 dollars, these investments were worth around about $350 billion. The agricultural sector represents just 0.14 per cent of the total stock of foreign direct investment. To put it in another way, in 2010 it represented an investment of approximately $670 million out of $350 billion. Of course, this is not the full picture of foreign investment in agriculture or, more latterly, agribusiness. But on the surface it does look like the agricultural industry is mostly Australian owned—in fact, Australian dominated; the figures in the report are well in excess of 98 per cent.

So what are the known facts? Over 50 per cent of Australia's land area is used for agriculture. One-fifth of this area is attributed to the Murray-Darling Basin, which is responsible for almost 40 per cent of the value of agricultural production. Farmers produce more than 90 per cent of our domestic food supply. Australia exports approximately 60 per cent of its overall agricultural production volume and around about 75 per cent of its gross agricultural production value. On these figures, it is safe to assume that a great many rural and regional communities around Australia are reliant on agriculture and food production. But of course, there is more to agriculture than only farming. As well as primary producers there are wholesalers, processors and businesses that support food production. So, while farmers make up around 70 per cent of the sector, the value generated in revenue terms occurs amongst enterprises beyond the farm gate, where the value adding occurs, of course. As with other sectors, foreign investment makes a contribution. As with any investment, it provides opportunity and most importantly it provides jobs—large numbers of jobs. For that reason we should consider very carefully changes that discourage or make it difficult for investment dollars, FDI, to flow into this country.

Senator Xenophon in his second reading speech mentioned media reports of the buy-up of Australia's agricultural assets becoming more aggressive since the global food shortage of 2008. Those same reports suggest there is growing community concern about the level of foreign investment in agricultural land. I do not doubt for one moment the sincerity of the media reports of many people's views. However, again I would caution against accepting that populism.

There is no evidence the current law on foreign investment in Australia needs changing. We should not be pandering to simple xenophobia or disguised claims for protection. We have a market economy which farmers generally widely support, including of course the value of their land—and we had an instance of that discussion earlier today—and to which they have adjusted over recent decades of reform. In this discussion, we do need to look at both the big picture and the total picture. The government, in response to the requests for more information and accurate information, has commissioned comprehensive research of foreign investment in agriculture that looked at not only Australia's agriculture land but also, importantly, water entitlements and agribusiness. We have also asked the ABS and the Rural Industries Research and Development Corporation, along with ABARES-BRS, to undertake a project that will give us a better picture, a more detailed picture, a fuller picture, an accurate picture, of the foreign investment landscape.

That project, in response to concerns generated over the last 18 months, has four particular components: firstly, the role and history of foreign investment in the development of agriculture in Australia, including assessing the impact which foreign investment has had; secondly, the domestic and international factors driving foreign investment in Australian agriculture; thirdly, the various ownership structures of agribusiness firms for subsets of the Australian agriculture industry, including businesses such as meat processing, sugar refining, dairy marketing, and other high-profile sectors, and changes in those structures over time; and, fourthly, measures used in other countries for monitoring and regulation of foreign investment in agricultural land. We want to know, firstly, the role and history; secondly, factors which drive investment; thirdly, the various ownership structures present in the industries; and, finally, the value-adding that occurs in industries and changes in those structures over time.

This important work commenced in November last year and, when completed, will inform our thinking in this area. While that is going on, the ABS Agricultural Land and Water Ownership Survey, ALWOS, has been completed. The data was released earlier this month. Surprisingly, despite media reports, the data shows that foreign ownership levels in Australia's agriculture sector are very modest. The overwhelming majority of Australia's agricultural businesses—99 per cent—are entirely Australian owned. In terms of agricultural land, 89 per cent is entirely Australian owned. As far as water entitlements are concerned, 91 per cent is in Australian hands. The results of this survey reinforce my view that this bill at this stage is simply unnecessary and not warranted by the available evidence. It does not make a sufficient case for change; although, as the government has conceded, we do need to learn more about the impact of foreign investment in the agricultural sector.

The overwhelming impression I have—and one which has been informed by the economics report behind this bill, is that we should not yet take the easy solution of jumping to conclusions. This type of research has not been undertaken since 1984. So it is important that we get the facts straight about what is a very important debate and what one suspects is going to continue to be an important debate until the facts are researched, published and established in this area. As a country, we have traditionally been reliant on foreign capital to build and develop our businesses in all parts of the economy. It would be foolish indeed to ignore the significant risks for Australia in making changes such as these that could discourage or hinder foreign investment.

Foreign investment—it goes almost without saying, in my view—is critical to ensuring our continued economic growth and prosperity, including in the agricultural sector and the value-adding industries attached to that sector. Given the strategic importance of the agricultural sector is likely to increase in the future—and the level of demand and the level of investment that is coming in suggest that is the case—Australia's foreign investment policy settings need to be right.

This bill is pre-emptive. It does not address some serious issues that must be considered prior to any changes being made in this sector. We should also be mindful that foreign investment is only a minor matter—an important matter but nonetheless minor—in the broad policy sweep of primary production. It is a distraction with major implications for foreign investment policy and should be rejected. In due course, if this matter goes to a vote, the bill should also be rejected.